Royal Adelaide Hospital, Australia’s most expensive building, set to open

Australia’s most expensive building, and the third most costly in the world, is a step closer to finally being opened after the South Australian government and a building consortium reached an out-of-court agreement.

The new Royal Adelaide Hospital

The new $2.3 billion Royal Adelaide Hospital was supposed to open in April last year but has become mired in a bitter and complex legal dispute over alleged defects. It is $640 million over budget, and has been bogged down in Supreme Court hearings.

Premier Jay Weatherill today announced the government and construction consortium SA Health Partnerships had last Thursday signed a deed of agreement “to pave the way for the delivery of the new Royal Adelaide Hospital”.

“The deed provides for SAHP to withdraw all of their court action and the technical completion is estimated to be reached in just a couple of weeks,” Mr Weatherill said.

However, there is still no firm opening date, although the technical completion milestone triggers a 90-day handover period.

Health Minister Jack Snelling today said he hoped a move could be made before the winter flu season.

“There’s no reason why we couldn’t be in before flu season hits in 2017,” he said.

Mr Snelling warned moving from the current city hospital to the new one was a major logistical undertaking, involving more than 5000 staff, volunteers and medical students and hundreds of thousands of items of equipment, along with patients.

Mr Snelling said there were several alleged defects still in dispute and independent consultants had started examining the issues.

Another view of the new hospital.

“The government and SAHP have both agreed we will abide by the recommendations of those independent experts,” Mr Snelling said.

The parties also had agreed to an independent arbitration process to resolve compensation.

“Where the government believes that the state is entitled to compensation, we’ll have those issues resolved with an independent arbitrator. That work has already started and we expect it to be done by the end of the year,” Mr Snelling said.

“Importantly, those issues will not prevent us from moving into the hospital.”

SAHP’s Mark Balnaves, asked whether the consortium had suffered reputational damage given the toxic nature of the public dispute with the government, said the finished product “speaks for itself”. Mr Balnaves denied knowledge of any problems with the “footings” of the new hospital.

The state’s Labor government and SAHP have been at loggerheads for months with high-powered legal teams facing off in the Supreme Court. The new RAH’s technical completion was supposed to have occurred on January 19 last year.

Mr Weatherill stepped in over Christmas in a bid to reach a breakthrough after the government, which last year rejected a consortium “cure plan” to finish the build, threatened imminent plans to terminate the new RAH build contract completely. Treasurer Tom Koutsantonis had dared the consortium to “bring it on” and sue the government.

This would have triggered costly and lengthy legal action in the courts as SAHP sought up to $5bn from the state over allegations the government had not acted in good faith and deliberately delayed the project because it was not ready to move in.

It is understood the government was seeking a payment of $600m and Crown law had advised the state had broad powers under which it could terminate the contract.

The new futuristic 800-bed hospital, on a 10-hectare site, will use robots to deliver food and equipment. It will have single rooms only and replace an ageing facility at the eastern end of North Terrace in Adelaide’s CBD.

According to architectural data company Emporis, the new Royal Adelaide Hospital is Australia’s most expensive building and the third most expensive in the world.

In September 2015 the government agreed to pay an extra $34.3m to settle a dispute with the builders over the cost of remediating the site. It has set a target of 50 per cent reduction in greenhouse gas emissions compared to other hospitals.

A private consortium is constructing the building to ultimately be owned by the South Australian government. Once opened the consortium will maintain the hospital while SA Health provides clinical services, staff, training and research. It is expected the government will not own the building outright until at least 2046.

The government plans to redevelop the old hospital site with more than 1000 apartments and a five-star hotel. Five heritage buildings will be retained with one third of the site becoming part of the neighbouring botanic gardens.